* State-run bank faces $50,000 daily fine
* Gucci sought account details of alleged counterfeiting
* Bank cited Chinese privacy law for withholding information
(Adds details from decision, lawyers' comment, case background)
By Jonathan Stempel
NEW YORK, Dec 1 A U.S. judge will impose a daily
fine of $50,000 against Bank of China Ltd starting
next week after holding it in contempt for refusing to turn over
account information on Chinese customers accused of selling
counterfeit luxury goods.
In a decision made public on Tuesday, U.S. District Judge
Richard Sullivan in Manhattan said the "coercive fine" will be
imposed starting on Dec. 8 unless the state-run bank complies
with subpoena requests for the records.
Bank of China is appealing the civil contempt order and
The records come from Chinese entities that were sued in
2010 by Gucci, Yves Saint Laurent, Bottega Veneta and other
units of Paris-based Kering SA for trademark
infringement over their sales of knockoff handbags, briefcases
and other products.
Bank of China, which is not a defendant, said it could not
turn over the records without violating Chinese privacy law and
that the judge lacked jurisdiction to force compliance.
Sullivan said, however, the bank's "manifest determination"
to ignore the subpoenas and his orders has made it hard for the
Kering plaintiffs to pursue their claims against "rampant
counterfeiters," and could harm consumers who fall victim.
"BOC's refusal to comply with U.S. law, while it continues
to receive the benefits attendant to its banking activity in the
United States, has inflicted a significant harm on plaintiffs
and the general public," Sullivan wrote. "Only a large fine will
have a coercive effect on BOC at this stage."
Sullivan also ordered the bank to cover the plaintiffs'
costs of litigating the contempt issue.
He noted that the fine represents a tiny fraction of Bank of
China's roughly $27.8 billion of profit in 2014.
The dispute is part of a larger conflict over financial
transparency between China and the United States, which employs
a disclosure-based regulatory regime. Clashes have grown more
frequent as Chinese companies expand beyond their country's
borders and raise more capital internationally.
Allen & Overy, the law firm representing Bank of China, in a
statement called the contempt order and sanctions unwarranted.
It also said Sullivan should have invoked the multilateral
Hague Evidence Convention to resolve the dispute, and respect
the bank's "responsibility" not to violate Chinese law by
turning over the account information.
Gucci and the other plaintiffs had asked Sullivan to order
Bank of China to reimburse $12 million to cover their losses
from the counterfeiting, or else to impose a fine.
Sullivan initially ordered Bank of China to turn over
customer records in 2011. He renewed his order in September,
after a federal appeals court told him to revisit the matter in
light of a recent U.S. Supreme Court decision.
The case is Gucci America Inc et al v. Li et al, U.S.
District Court, Southern District of New York, No. 10-04974.
(Reporting by Jonathan Stempel in New York, additional
reporting by Nate Raymond; Editing by Will Dunham and Steve